Several astute traders began compiling relevant data at the outset of Chen Dong and Soros's massive sell-off. They discovered that several institutions had dumped over 12.3 billion pesos through various channels, while the amount of peso purchased during the same period was far lower. In other words, institutions were openly shorting the peso.
Considering the large number of peso short sellers in the IMM market, these veterans immediately realized that this was a war against the peso. This discovery both surprised and delighted them.
The aftereffects of the European financial crisis two years ago are still lingering, and a new round of currency crisis is about to erupt in South America.
This delighted forex traders who prayed for a financial crisis to happen every day—a golden opportunity to gamble again!
In fact, it is the inherent disadvantages of fixed exchange rates that allow these traders to short sell with confidence, because the cost they need to pay is very small, while the returns are frighteningly large.
But since some people are shorting, others are naturally going long.
Many people scoffed at Chen Dong's massive sell-off of pesos. They bought in when the exchange rate hit its lowest point and then sold when Mexican banks intervened, profiting from the exchange rate difference.
But they were unaware that the Mexican bank, which they relied on as their biggest backer, was discussing the devaluation of the peso.
Those who make money through exchange rate differences will find themselves in trouble if they choose to enter the market at this time. Not only will their profits be wiped out, but they may even lose a large sum of money.
From this perspective, they are like dancers on a cliff, one wrong step and they will be smashed to pieces.
"Boss, we only have 1.5 billion US dollars left." That day, Wangcai called Chen Dong again to report to him.
Chen Dong scoffed dismissively.
However, Chen Dong noticed the fatigue in Wangcai's voice, so he said, "Tomorrow is the weekend, so you and everyone should get some rest. We can exchange the remaining 1.5 billion yuan next week."
On the other end of the phone, cheers and shouts of joy came through.
Clearly, the traders are ecstatic.
Only Wangcai seemed very worried. He lowered his voice and said, "Boss, if we can't cash out this $1.5 billion we have soon, we'll be in trouble."
At this point, Wangcai already knew what Chen Dong was planning: to resolutely short the peso.
Long before Wangcai left Hong Kong for the United States, Chen Dong approached him and told him about his plans.
After hearing what Chen Dong said, Wangcai was stunned for a long time.
This plan is incredibly audacious.
Even the most audacious speculators in history couldn't have conceived of such a plan.
The boss not only has to personally engage in the battle against Mexican finance, but also needs to remain behind giants like Quantum Fund, and mobilize numerous commercial banks worldwide to participate. This is truly an enormous undertaking.
Although he was previously a trader at a Wall Street investment bank, he was just a trader. Although he had become a veteran by following Chen Dong and gaining experience, he was still surprised and excited to be involved in a battle to short the peso.
But since the boss values him so much, Wangcai has no reason to refuse.
Even more so, a raging fire called ambition began to burn within him.
It has to be said that Wangcai, like his fellow Wall Street traders, is inherently inclined to stir up trouble, which explains why they are known as the "Wolves of Wall Street."
What they fear most is market stability, because stability means a lack of risk, and without risk, there is no return.
Wangcai has already spread the word about this to relevant personnel at major banks; it's just unknown whether they followed suit.
However, Wangcai could sense that the short-selling pressure in the market had been increasing recently, though he didn't know who was behind it.
Regardless of which faction it is, as long as what they do aligns with their own, it's acceptable.
Wangcai had also heard Chen Dong mention that Quantum Fund and Tiger Fund were involved in these matters, and he had also inquired indirectly and found some clues. Perhaps it was the banks associated with these institutions that were behind it.
Great news!
At this moment, Chen Dong fell silent for a moment, clearly considering Wangcai's words.
However, Chen Dong quickly said, "Don't worry! We can leave the money there for now and talk about it next Monday!"
Chen Dong's idea was very simple.
First of all, with such a huge sum of money, it would be difficult to find a competitor in the market. Even if the staff worked overtime all night, it would probably be to no avail.
Secondly, in Chen Dong's memory, the Mexican peso officially devalued in December of his previous life. However, in this life, Chen Dong believes that with his intervention and a series of meticulous operations that mobilized various forces, such as international speculative capital, hedge funds, and banks, the course of events will be completely different, and there may be significant changes in the near future.
Of course, no matter what changes occur, he is able to deal with them effectively because, compared to his previous life, he has more substantial initial capital and a broader vision.
Although he didn't know the specific reasons for the Mexican peso's devaluation, he believed it was likely due to a few possibilities, such as declining GDP, a current account deficit, and an accelerated exodus of foreign capital.
Mexico, which was doing relatively well, suddenly announced a currency devaluation in the middle of the night, making things even worse.
Within just two days, all of Mexico's foreign exchange reserves were depleted, forcing the peso to float freely.
Chen Dong is now certain that the Mexican government will not announce the devaluation at that time, because his intervention will inevitably bring it forward.
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